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Ascent of the Dragon

Published: 01/10/2017 - Filed under: Home » Archive » 2017 » October 2017 » Special Reports » Home » Features » Home »

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Let’s start with a few numbers: outbound travelers from China are predicted to number 200 million by 2020, according to a 2016 survey from Asian brokerage and investment group CLSA. Factor in the explosion of domestic air travel, as booming business in the Middle Kingdom creates a new middle class of between 300 and 400 million people, and it will come as no surprise that the International Air Transport Association expects China to displace the US as the world’s largest aviation market by 2025.

The major driver comes from domestic travel – of the 3,326 routes operated in China in 2015, 2,666 were internal. However, there’s an increasing appetite for international exploration, with the outbound Chinese market being targeted heavily by everyone in the travel and hospitality industry.

Over the past two decades the country has transformed its aviation offering, with the number of airlines doubling to 48 and rapid growth in route networks. Today nearly every second- and third-tier city in China has an airport – with some boasting more than one.

Yet with airports and airspace already approaching saturation point, as evidenced by the notorious flight delays and cancellations that already create chaos and confusion in departure halls, it’s a race against time to implement the infrastructure needed to handle the staggering projected growth.

Airports – New and improved

In its 13th Five-Year Plan (2016-2020), the Chinese government announced its aim to develop the aviation sector, focusing on improving passenger experience and preparing for increased mid- to long-haul international routes. As part of this brief, the target is to build an additional 20 airports across the country by 2020, bringing the total to 260. Last year saw the completion of a number of new facilities in Shandong, Guangdong, Yunnan and Qinghai provinces, with many more under construction.

Arguably the most important is the new RMB80 billion ($11.7 billion) mega-airport being constructed south of Beijing. Despite already having two airports – Beijing Capital International Airport and the smaller, more domestic-focused Nanyuan Airport – the situation is already at breaking point. Although the former is the second largest airport in the world, with a maximum capacity of 83 million passengers, in 2015 this had already been exceeded, with almost 90 million passengers passing through.

With a scheduled opening in 2019, the new international airport will be located in the southern Daxing district, positioning it conveniently closer to the city center. Its immediate operating capacity will be around 45 million passengers, expanding to 72 million by 2025 with an ultimate capacity of 100 million – which by current standards would make it the biggest airport in the world.

The futuristic facility was conceived by airport design experts ADP Ingénierie – a wholly-owned subsidiary of Aeroports de Paris. The centralized, single-terminal concept is shaped like a hand, with each of the five “fingers” housing boarding gates. The compact design means the farthest gate is just an eight-minute walk away, while travelers will also have easier access to facilities such as shops and ground transport.

The runway design aims to minimize delays, with four runways (a total of seven are planned) due to be operational immediately: “At major airports around the world, aircraft often have long taxis to get to their assigned runways, which is wasting time. Our new runway design allows flights to take off quickly after the gate closes, thus solving some flight delay issues,” says Zhu Wenxin, spokesperson for the Beijing New Airport Construction Headquarters.

Meanwhile, in Chengdu, the capital of Sichuan province, a second airport is being constructed to serve the “gateway to western China.” Increasingly a crucial transport hub for the southwest, as well as a major contributor to the region’s economic development, Chengdu is a natural choice for investment – and it has come in the nick of time.

The existing Chengdu Shuangliu International Airport has a maximum capacity of 50 million, though passenger traffic is already close to surpassing this, with 62 million passengers expected by 2020. Built to be “future-proof,” the new RMB72 billion ($10.5 billion) Chengdu Tianfu International Airport will have six runways and a capacity of 90 million, an hour’s drive from the city center and within easy reach of Chongqing to the east via planned road and rail link-ups.

Other major new aviation construction in the works includes a new international airport in Xiamen, scheduled to open in 2020 with capacity for 70 million travelers. Qingdao on the northeast coast is also currently building a new four-runway airport – due to open in 2025 – that will accommodate large aircraft including A380s and 747s and cater to up to 55 million passengers annually.

Brand-new airports aside, a slew of extension projects at existing airports are also underway. In 2013, Shenyang Taoxing International Airport in northern China welcomed a new 2.7 million-square-foot international terminal. Meanwhile, Chongqing Jiangbei International Airport began operations from its new 578,000-square-foot Terminal 3A at the end of August. 

In the south on Hainan Island, work has begun on a new terminal at Haikou Meilan International Airport. Expected to open in 2019, the RMB15.3 billion ($2.2 billion) project will increase the airport’s capacity to 35 million travelers annually.

Airlines – Spreading Their Wings

China has 48 passenger airlines now in operation – impressive, given the fact that the oldest airline still in existence today only launched 33 years ago. While the majority of these focus on the domestic market, there has been a marked trend toward purchasing long-haul and larger aircraft, and developing international routes, which show the Chinese airlines are eyeing the global market and actively positioning themselves to compete with foreign carriers on an international scale.

Air China, China Eastern and China Southern, the country’s “big three” airlines, have built the most comprehensive air networks in China, covering all major cities and developing areas, as well as reaching out to international destinations.

National carrier Air China currently serves 40 countries and 174 cities, including 68 international destinations. It became the first Chinese airline to fly to six continents with the launch of flights to Johannesburg in South Africa in 2015.

The carrier has also been making rapid fleet upgrades both to improve passenger experience and strategically position itself for further expansion. Last year it welcomed its first 787-9 Dreamliner, one of 15 Dreamliners the carrier has on order. 

Meanwhile, China Eastern’s passenger traffic jumped by 2.5 million from 12.8 million in 2014 to 15.3 million in 2015. The carrier has launched 21 new international routes since 2013, with destinations as geographically diverse as Chicago, Amsterdam and Brisbane.

Fleet upgrades include the retrofitting of its 777-300ER aircraft with new first, business and economy seats, while the airline has also placed an order for 20 A350s and 15 787s. China Eastern plans to operate the new Dreamliners on routes between China and North America.

China Southern lays claim to being the first airline in the world to operate both the A380 and 787 at the same time. In fact, the airline has the largest fleet in Asia and placed fourth in the world in IATA’s 2016 rankings. Over the coming five years, China Southern will continue to strengthen its fleet by purchasing new aircraft types such as the 787-9 and 737 MAX. By 2020, its fleet size is projected to increase to 1,000 aircraft, and it expects to carry 168 million passengers annually.

The airline now flies to 49 international cities after launching routes to Toronto and Adelaide last year. Coming soon, it has plans to begin a South American service, flying to Mexico City via Vancouver, while direct services to Cairns and Frankfurt are also in the cards.

Headquartered in Guangzhou, China Southern is also expecting to benefit from recent developments at Guangzhou Baiyun International Airport, which opened a third runway in 2015 and has a second terminal scheduled to open in February 2018. 

 

Dark Horses 

While the “big three” have dominated thus far, a handful of airlines are expanding so aggressively that they may well soon challenge the status quo. Hainan Airlines and Xiamen Air in particular have grown quickly in terms of fleet size and aircraft models, and have already expanded their route networks to the US and Europe.

Owned by massive conglomerate HNA Group (which also has a stake in some other airlines, including Virgin Australia), Hainan Airlines has seen major investment and rapid growth. The jewel of the fleet was introduced in June last year – a 787-9. The latest Dreamliner will be deployed on US routes such as Las Vegas, as well as to cities such as Tel Aviv and Manchester. In addition, the airline is currently applying to fly to London, New York and Los Angeles.

Until recently, Xiamen Air’s business model focused solely on the regional and domestic markets. However, it took an important step in 2015 with the delivery of its first 787-8, which it deployed on its inaugural continental route to Amsterdam. The carrier continued to expand with a service to Sydney in the same year, followed by routes to Melbourne, Vancouver and Seattle in 2016 and New York in 2017. It now has six three-class 787-8s offering first, business and economy seating, along with the newer 787-9.

Sichuan Airlines too is eyeing a share of the global market, and now flies to cities such as Sydney, Vancouver and Los Angeles. Not to be outdone, Tianjin Airlines launched services to London Gatwick and Auckland last year, and is planning to add Melbourne later this year. Beijing Capital Airlines also offers Auckland and Melbourne service, as well as Vancouver and several European destinations, while Shenzhen-based Donghai Airlines has finalized an order for 25 737 MAXs and five 787-9 aircraft last July. 

Made in China

A major watershed moment in China’s aviation history came last year, when the first ever Chinese-produced commercial passenger jet began to operate. The state-owned Commercial Aircraft Corporation of China (COMAC) was founded in 2008 to develop a regional jet program, with serious intentions to rival Airbus and Boeing in the future.

In June last year, Chengdu Airlines received the first ARJ21 aircraft – a short- to medium-haul aircraft with 78 seats in two classes. COMAC’s latest model is the C919, a narrow-body aircraft with up to 168 seats, which entered the flight test stage in February. So far, the manufacturer has received 570 orders, with China Eastern set to become launch customer. 

Given the ravenous appetite of China’s aviation industry players, it’s a fairly safe bet more aircraft models will follow that will be bigger and have longer range capacity. China is looking out on the world… and its gaze is far reaching.   

By Valerian Ho

 


 

 

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